guardian.co.uk,
Heather Stewart, business editor, Saturday 7 July 2012
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| A customer cuts up her bank card outside a London branch of Barclays. Photograph: Maciek Musialek / Demotix |
Angry bank
customers have been voting with their wallets and bombarding co-ops, building
societies and credit unions with applications for current accounts over the
past week, after the NatWest computer meltdown and the Barclays rate-rigging
scandal.
Data
compiled by the campaign group Move Your Money UK shows an explosion in
requests to switch from large high street banks to smaller alternatives that
consumers hope will take a more ethical approach. Charity Bank, which lends its
savers' money to charities, has seen a 200% increase in depositors; the Ecology
Bank has had a 266% jump in applications; and Triodos, a Bristol-based
"sustainable bank", a 51% increase.
Credit
unions, which are often small institutions investing people's savings in their
local economy, have seen week-on-week increases of at least 20%, some of them
up to 300%. Evidence of the growing number of switchovers comes as Ed Balls,
the shadow chancellor, on Sunday calls on the government to make it easier for
consumers to switch to another bank or building society. Speaking on the BBC's
Andrew Marr Show, Balls will say that while people are increasingly
dissatisfied with their banks, it is still too difficult for customers to
switch accounts. He told the Observer: "Ministers are dragging their feet
on reforms to improve competition and consumer choice in the banking sector.
Consumers must come first. It's time for action."
Consumers
have been looking for alternatives to the mainstream banks to protest about the
revelation that Barclays traders conspired to fix a key interest rate over a
number of years; and the IT chaos that left millions of RBS customers unable to
access their accounts.
Since the
start of this year, Move Your Money UK estimates that an average of 80,000
savers a month have been leaving the crisis-prone banking giants – a total of
almost half a million since the start of 2012. The Co-operative Bank, which has
seen a 25% rise in applications over the past week, hopes to capitalise on the
public's frustration by trebling its number of branches to 1,000, if it can
clinch a deal to buy 632 from Lloyds Banking Group.
Lloyds,
which was bailed out by the taxpayer during the financial crisis, was ordered
by Brussels to sell the branches when it took over the troubled HBOS.
Co-op's unusual
management structure, with a board that included a Methodist minister and a
plasterer, had initially caused some concerns at City regulator the Financial
Services Authority, but the takeover now looks close to being completed, and
Co-op hopes it will enable it to become a major player on the high street. The
coalition, which has said it would like to see more competition in the banking
sector, is also keen for the Co-op to succeed.
Move Your
Money has organised community events and protests to publicise alternatives to
the so-called big five — Barclays, Lloyds, HSBC, RBS and Santander.
"There's a decline in trust," said spokesman Louis Brooke. "You
can lose your trust in a bank because you don't believe they've got enough
money, a la Northern Rock, but that's not what's going on here; it's that
people no longer see the banks as legitimate institutions."
Adam
Scorer, director of external affairs at the advocacy group Consumer Focus,
said: "Consumers have decided to mete out their punishment by moving away
from banks who have been tarnished by recent events and revelations. RBS have
failed on the basics of managing their customer accounts. Barclays have failed
on the basics of behaving with honesty and integrity. These might be very
different issues, but they both degrade the reputation of banks in the eyes of
their customers." Many British banks shifted from being
"mutuals" – owned by their customers – to shareholder-owned public
companies in the 1980s and 1990s, in a wave of "demutualisations",
seen as making them more successful. But as bankers' pay has exploded, and
profits flowed to shareholders rather than savers, a growing number of people
have begun to warm to the idea of old-fashioned mutuals, including building
societies.
Andy
Haldane, the executive director for financial stability at the Bank of England,
has also suggested that new alternatives, such as peer-to-peer lending
companies, which connect borrowers and savers, could eventually become rivals
to the banks.
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